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Pearson plc (GB:PSON)
:PSON

Pearson (PSON) AI Stock Analysis

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GB

Pearson

(LSE:PSON)

73Outperform
Pearson's overall stock score reflects its strong financial performance, particularly in cash flow and balance sheet management, alongside positive earnings call outcomes and strategic initiatives. Despite modest technical indicators and valuation, the company's strategic focus on AI and shareholder returns through buybacks provide a solid outlook.
Positive Factors
Higher Education Division
Pearson delivered the long-awaited inflection in the Higher Education division in its 3Q24 results, and reassuringly reiterated 2024 guidance.
Strategic Execution
Pearson's FY24 results highlight execution against strategic priorities.
Negative Factors
Market Position
Analysts are reiterating questions about Pearson's current market position.
Regulatory Environment
Potential US regulatory changes may impact Pearson's operations.

Pearson (PSON) vs. S&P 500 (SPY)

Pearson Business Overview & Revenue Model

Company DescriptionPearson plc, headquartered in London, United Kingdom, is one of the world's leading education companies. It operates in various sectors including higher education, K-12, English language learning, and workforce skills. Pearson specializes in providing educational content, digital learning tools, and assessments, with a strong focus on leveraging technology to enhance learning outcomes. The company serves a global market, delivering products and services to educational institutions, corporations, and individual learners.
How the Company Makes MoneyPearson makes money primarily through the sale of educational materials and services. Its revenue streams include the sale of textbooks and digital content for K-12 and higher education institutions, online learning platforms, and assessments for academic and professional qualifications. Additionally, Pearson generates revenue through its English language learning programs and workforce training solutions. The company has also established significant partnerships with educational institutions and governments to develop customized learning and assessment solutions. A key factor contributing to Pearson's earnings is its ongoing shift towards digital and online offerings, which aligns with the increasing demand for flexible and accessible education solutions.

Pearson Financial Statement Overview

Summary
Income Statement
Balance Sheet
Cash Flow
Breakdown
TTMDec 2023Dec 2022Dec 2021Dec 2020Dec 2019
Income StatementTotal Revenue
4.45B3.67B3.84B3.43B3.40B3.87B
Gross Profit
2.25B1.83B1.79B1.68B1.63B2.01B
EBIT
658.50M498.00M271.00M183.00M283.00M275.00M
EBITDA
1.05B1.07B930.00M751.00M1.01B840.00M
Net Income Common Stockholders
445.00M378.00M242.00M177.00M330.00M264.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
312.00M312.00M543.00M937.00M1.10B437.00M
Total Assets
6.73B6.73B7.31B7.34B7.45B7.65B
Total Debt
1.16B1.16B1.22B1.40B1.65B1.66B
Net Debt
849.00M849.00M672.00M463.00M554.00M1.23B
Total Liabilities
2.74B2.74B2.89B3.06B3.32B3.33B
Stockholders Equity
3.97B3.97B4.40B4.27B4.13B4.31B
Cash FlowFree Cash Flow
765.00M399.00M214.00M150.00M255.00M176.00M
Operating Cash Flow
1.15B525.00M361.00M326.00M389.00M369.00M
Investing Cash Flow
-476.50M-301.00M13.00M-80.00M591.00M-325.00M
Financing Cash Flow
-712.50M-450.00M-804.00M-414.00M-299.00M-102.00M

Pearson Technical Analysis

Technical Analysis Sentiment
Negative
Last Price1201.00
Price Trends
50DMA
1280.62
Negative
100DMA
1262.00
Negative
200DMA
1146.55
Positive
Market Momentum
MACD
-20.69
Negative
RSI
44.16
Neutral
STOCH
56.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:PSON, the sentiment is Negative. The current price of 1201 is below the 20-day moving average (MA) of 1224.11, below the 50-day MA of 1280.62, and above the 200-day MA of 1146.55, indicating a neutral trend. The MACD of -20.69 indicates Negative momentum. The RSI at 44.16 is Neutral, neither overbought nor oversold. The STOCH value of 56.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:PSON.

Pearson Risk Analysis

Pearson disclosed 29 risk factors in its most recent earnings report. Pearson reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Pearson Peers Comparison

Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GBREL
81
Outperform
$72.41B37.8856.34%1.50%2.98%10.10%
73
Outperform
£7.90B18.6210.83%2.00%-3.32%20.38%
GBRWS
66
Neutral
£410.49M8.685.03%11.22%-2.13%
62
Neutral
£781.51M10.927.06%0.46%-0.09%-29.06%
59
Neutral
$27.83B1.88-18.16%4.00%2.13%-44.45%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:PSON
Pearson
1,172.50
182.77
18.47%
GB:FUTR
Future plc
703.00
23.04
3.39%
GB:RWS
RWS Holdings
107.20
-74.87
-41.12%
GB:REL
RELX plc
3,816.00
574.93
17.74%

Pearson Earnings Call Summary

Earnings Call Date: Feb 28, 2025 | % Change Since: -8.88% | Next Earnings Date: Aug 4, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Pearson's strong financial performance, strategic partnerships, and successful application of AI across its products. While there were challenges in Virtual Schools and a projected moderation in English Language Learning growth, the overall outlook remains positive with significant strategic initiatives and shareholder returns.
Highlights
Financial Performance Exceeds Expectations
Pearson delivered a financial performance in line with market expectations, growing sales by 3% and profits by 10%, with an EBIT margin of 16.9% and strong free cash flow generation.
Strategic Partnerships with AWS and Microsoft
Pearson announced a partnership with AWS, following a similar strategic partnership with Microsoft, to enhance tech transformation and expand business relations in Enterprise Learning and Skills.
AI Integration Across Products
Pearson scaled the application of AI across a wide range of products and services, enhancing their educational offerings and operational efficiencies.
English Language Learning Growth
Despite a challenging market, Pearson's PTE sales grew, and new AI-powered products for English students and teachers were launched, providing a strong basis for future growth.
Successful Contract Renewals and Expansions
Pearson VUE achieved a customer retention rate of 99%, successfully renewing key contracts in U.S. student assessments and scaling their qualifications business internationally.
Strong Free Cash Flow and Shareholder Returns
Operating cash conversion was 110%, and free cash flow conversion was 117%, enabling a 6% increase in dividends and a new £350 million share buyback.
Lowlights
Challenges in Virtual Schools
Virtual Schools declined by 1% due to known school losses, although enrollments for 2024-2025 were up 4% on a same-school basis.
Moderation in English Language Learning
While growth was strong in 2024, growth in English Language Learning is expected to moderate in 2025, partly due to the impacts of elections on immigration rates.
Company Guidance
In the call, Pearson provided a guidance indicating a 3% increase in sales and a 10% rise in profits for the fiscal year 2024, resulting in an EBIT margin of 16.9%. The company highlighted its success in retaining key contracts and expanding internationally in its Assessments and Qualifications division, achieving a customer retention rate of 99% at Pearson VUE. It also reported strong free cash flow conversion at 117% and announced a share buyback of £350 million. Looking ahead to 2025, Pearson expects mid-single-digit growth across its divisions, driven by continued innovation, particularly in AI applications and strategic partnerships with companies like AWS and Microsoft, which are poised to support Pearson's enterprise learning expansion. The company remains confident in achieving sustained margin improvement, with an average increase of 40 basis points per annum beyond 2025.

Pearson Corporate Events

Stock BuybackBusiness Operations and Strategy
Pearson Advances £350 Million Share Buyback Program
Positive
Apr 1, 2025

Pearson plc has executed a share buyback transaction, purchasing 166,366 of its ordinary shares on the London Stock Exchange at an average price of 1,224.79 pence per share. This transaction is part of the first £175 million tranche of the company’s £350 million share buyback program, which was announced earlier in March 2025. The purchased shares will be canceled, indicating a strategic move to return value to shareholders and potentially improve earnings per share by reducing the number of shares outstanding.

Regulatory Filings and Compliance
Pearson PLC Updates Shareholder Voting Rights and Capital Structure
Neutral
Apr 1, 2025

Pearson PLC announced that as of March 31, 2025, it has 665,853,847 ordinary shares in circulation, each granting one vote at general meetings. This information is crucial for shareholders to determine their reporting obligations under the FCA’s Disclosure and Transparency Rules, reflecting Pearson’s compliance with regulatory requirements.

Business Operations and Strategy
Pearson PLC Directors Acquire Shares to Strengthen Stakeholder Alignment
Positive
Apr 1, 2025

Pearson PLC has announced the purchase of ordinary shares by its Deputy Chair, Senior Independent Director, and UK-based Non-Executive Directors under the company’s Non-Executive Directors’ Share Purchase Plan. The transactions, conducted on the London Stock Exchange, reflect a strategic move to align the interests of the directors with those of the shareholders, potentially strengthening stakeholder confidence and reinforcing the company’s commitment to its governance practices.

Stock BuybackBusiness Operations and Strategy
Pearson Advances Share Buyback Program with Recent Share Purchase
Positive
Mar 31, 2025

Pearson plc has announced the purchase of 159,524 of its ordinary shares on the London Stock Exchange as part of its ongoing £350 million share buyback program. This transaction, executed by Morgan Stanley & Co. International plc, is part of the first £175 million tranche of the buyback initiative, indicating Pearson’s strategic move to enhance shareholder value by reducing the number of outstanding shares.

Stock BuybackBusiness Operations and Strategy
Pearson Advances Share Buyback Program with Recent Share Purchase
Positive
Mar 28, 2025

Pearson PLC announced the purchase of 155,418 of its ordinary shares as part of its £350 million share buyback program. This transaction, conducted through Morgan Stanley & Co. International plc, forms part of the first £175 million tranche of the program, indicating Pearson’s strategy to enhance shareholder value and optimize its capital structure.

Business Operations and StrategyRegulatory Filings and Compliance
Ameriprise Financial Increases Stake in Pearson PLC
Neutral
Mar 28, 2025

Pearson PLC has announced a change in its voting rights, with Ameriprise Financial, Inc. increasing its stake to 5.114% from a previous 4.93%. This acquisition of voting rights by a major financial entity like Ameriprise could potentially impact Pearson’s strategic decisions and influence its market positioning, reflecting a significant interest from investors in the company’s future direction.

Stock Buyback
Pearson PLC Advances Share Buyback Program with New Purchase
Positive
Mar 27, 2025

Pearson PLC has announced the purchase of 159,668 of its ordinary shares as part of a £350 million share buyback program. This move, involving a first tranche of £175 million, is aimed at enhancing shareholder value by reducing the number of shares in circulation, potentially increasing earnings per share and influencing stock price positively.

Shareholder Meetings
Pearson PLC Announces Hybrid Format for 2025 AGM
Neutral
Mar 27, 2025

Pearson PLC has announced the availability of documents for its 2025 Annual General Meeting (AGM), which will be held on May 2, 2025, at its registered office in London. The AGM will be conducted as a hybrid meeting, allowing shareholders to participate both physically and electronically, enabling them to ask questions and vote on resolutions via a live webcast.

Stock BuybackBusiness Operations and Strategy
Pearson PLC Initiates Share Buyback to Enhance Shareholder Value
Positive
Mar 26, 2025

Pearson PLC has announced the purchase of 137,042 of its own ordinary shares as part of the first tranche of its £350 million share buyback program. This move is part of a strategic initiative to enhance shareholder value and optimize the company’s capital structure, potentially impacting its market positioning and stakeholder interests.

Stock BuybackBusiness Operations and Strategy
Pearson Advances Share Buyback Program with Significant Share Purchase
Positive
Mar 21, 2025

Pearson PLC announced the purchase of 225,924 of its ordinary shares as part of a £350 million share buyback program, with this transaction forming part of the first £175 million tranche. This strategic move is aimed at optimizing the company’s capital structure and potentially enhancing shareholder value, reflecting Pearson’s commitment to returning capital to its investors.

Stock BuybackBusiness Operations and Strategy
Pearson Initiates £350 Million Share Buyback Program
Positive
Mar 20, 2025

Pearson PLC has announced the purchase of 191,697 of its ordinary shares on the London Stock Exchange as part of its £350 million share buyback program. This transaction, executed through Morgan Stanley & Co. International plc, marks the beginning of the first £175 million tranche, reflecting Pearson’s strategic move to enhance shareholder value and optimize its capital structure.

Stock Buyback
Pearson PLC Advances Share Buyback Program with New Purchase
Positive
Mar 19, 2025

Pearson PLC has announced the purchase of 158,843 of its ordinary shares on the London Stock Exchange as part of its £350 million share buyback program. This move is part of the first £175 million tranche, demonstrating Pearson’s commitment to returning value to shareholders and potentially strengthening its market position.

Stock BuybackBusiness Operations and Strategy
Pearson Initiates Share Buyback to Boost Shareholder Value
Positive
Mar 19, 2025

Pearson plc has announced the purchase of 155,560 of its ordinary shares on the London Stock Exchange, as part of its £350 million share buyback program. This move, involving Morgan Stanley & Co. International plc, reflects Pearson’s strategic initiative to enhance shareholder value by reducing the number of shares in circulation, potentially increasing the value of remaining shares.

Stock Buyback
Pearson Initiates £350 Million Share Buyback Program
Neutral
Mar 18, 2025

Pearson plc has announced the commencement of a £350 million share buyback program, with the first tranche of £175 million starting on 18 March 2025 and expected to conclude by 18 August 2025. The program, managed by Morgan Stanley & Co. International plc, aims to reduce the company’s capital by repurchasing and canceling ordinary shares, with a second tranche of £175 million planned for the future.

Financial DisclosuresRegulatory Filings and Compliance
Pearson Releases 2024 Annual Reports
Neutral
Mar 14, 2025

Pearson has published its Annual Report and Accounts for the year ended 31 December 2024, along with its Annual Report on Form 20-F, both of which are now available on its website. These documents have been submitted to the relevant regulatory bodies, including the UK’s National Storage Mechanism and the U.S. Securities and Exchange Commission, reflecting Pearson’s commitment to transparency and regulatory compliance.

Executive/Board Changes
Pearson’s Sherry Coutu Appointed to Phoenix Group Board
Neutral
Mar 14, 2025

Pearson PLC announced that Sherry Coutu CBE, a Non-Executive Director of Pearson, will join the Board of Phoenix Group Holdings plc as a Non-Executive Director and a member of the Remuneration Committee starting 1 May 2025. This appointment highlights Pearson’s commitment to strengthening its leadership team and may influence its strategic direction and stakeholder relations.

Business Operations and Strategy
Ameriprise Financial Adjusts Stake in Pearson PLC
Neutral
Mar 5, 2025

Pearson PLC has announced a change in its major holdings, with Ameriprise Financial, Inc. reducing its voting rights in the company from 5.075% to 4.93% as of February 28, 2025. This adjustment in holdings may impact Pearson’s shareholder dynamics and reflects Ameriprise Financial’s strategic financial decisions regarding its investment in Pearson.

Regulatory Filings and Compliance
Pearson PLC Updates Shareholder Voting Rights and Capital Structure
Neutral
Mar 3, 2025

Pearson PLC announced that as of February 28, 2025, it has 666,575,214 ordinary shares in circulation, each granting one vote at general meetings. This information is crucial for shareholders to determine their notification obligations under the FCA’s Disclosure and Transparency Rules, reflecting Pearson’s commitment to regulatory compliance and transparency.

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Pearson Reports Strong 2024 Results and Announces Strategic Partnership with AWS
Positive
Feb 28, 2025

Pearson reported strong financial and strategic performance for 2024, with a 10% increase in adjusted operating profit and a 3% growth in underlying sales. The company announced a £350m share buyback, highlighting its robust cash position and confidence in future growth. Pearson’s strategic partnership with AWS aims to enhance its AI capabilities and expand its enterprise offerings, positioning the company for continued growth in 2025.

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Pearson Reports Strong 2024 Results and Announces Strategic Partnership with AWS
Positive
Feb 28, 2025

Pearson reported strong financial and strategic performance for 2024, with a 10% increase in adjusted operating profit and a positive outlook for 2025. The company announced a new strategic partnership with AWS to expand its AI capabilities and enhance its learning products, alongside a £350m share buyback, reflecting confidence in its financial position and future growth. Pearson’s focus on AI and enterprise growth, alongside strong cash generation, positions it well for continued success and shareholder returns.

DividendsRegulatory Filings and Compliance
Pearson Updates on Share Transactions Involving Director’s Family
Neutral
Feb 3, 2025

Pearson, a global education and publishing company, has disclosed a series of transactions involving the purchase of its ordinary shares by William Budenberg, spouse of non-executive director Sherry Coutu. These transactions were executed through the company’s Dividend Reinvestment Plan. The transactions resulted in an increase in Sherry Coutu’s total reportable shareholding to 18,891 shares, illustrating Pearson’s commitment to transparency in compliance with the Market Abuse Regulation.

Regulatory Filings and Compliance
Pearson Announces Current Share Capital Details
Neutral
Feb 3, 2025

Pearson PLC announced that as of January 31, 2025, the company has a total of 666,554,453 ordinary shares in circulation, each granting one vote at general meetings. This announcement is relevant for shareholders to determine their notification requirements under the FCA’s Disclosure and Transparency Rules.

Private Placements and FinancingBusiness Operations and Strategy
Pearson PLC Executive Participates in U.S. Employee Stock Purchase Plan
Neutral
Jan 24, 2025

Pearson PLC announced a transaction involving Tom ap Simon, President of Higher Education and Virtual Learning, who purchased American Depositary Receipts (ADRs) through the company’s U.S. Employee Stock Purchase Plan. The transaction, conducted on the New York Stock Exchange, involved 569.6924 ADRs at a price of $10.532 each, totaling an aggregated price of $6,000. This notification highlights the company’s commitment to aligning its leadership’s interests with its stakeholders through equity participation.

Pearson Achieves Strategic Growth in 2024 with AI and Microsoft Partnership
Jan 16, 2025

Pearson has reported a successful 2024, with 3% underlying sales growth and a 10% increase in adjusted operating profit, driven by advancements in AI and strategic partnerships, including a new collaboration with Microsoft to enhance enterprise and technology capabilities. The company is strategically evolving to focus more on enterprise learning, streamlining operations to better meet customer needs, with a strong financial position and new executive appointments to support its growth ambitions.

Pearson CEO Executes Share Transaction Under Incentive Plan
Jan 6, 2025

Pearson PLC announced a transaction involving its CEO, Omar Abbosh, regarding the release and sale of ordinary shares. As part of the company’s Long-Term Incentive Plan, shares were released and subsequently sold to cover the tax liabilities associated with the vesting share awards. This transaction, conducted on the London Stock Exchange, underscores Pearson’s ongoing commitment to aligning executive compensation with company performance, potentially impacting shareholder value and market perception.

Pearson Updates Shareholder Voting Rights and Capital Structure
Jan 2, 2025

Pearson PLC announced that as of December 31, 2024, the company had 666,264,831 ordinary shares in circulation, each granting one vote at general meetings. This disclosure ensures transparency and helps shareholders determine their shareholding interests according to the Financial Conduct Authority’s rules.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.